"One of the things I think you'll see differently from us in the future than in the past is a more proactive approach to sustainability," he said. "Be prepared for some great new products to be hitting the market ... Don't be surprised if we pull in an acquisition or two."

That strategy includes a focus on things that are attractive to both retailers and end consumers, he said.

"One of the things that we really want to make sure that we're on the front of our feet with is looking at new technologies, technologies that are going to play well with our strategy," Hayes said. Tyson recently launched a $150 million Venture Capital Fund to funnel all the innovative legwork to one team, he added.

Early in the interview-style presentation, Hayes was asked whether an acquisition would give Tyson more of an advantage in the antibiotic-free protein space.

"We're always open to acquisitions," he said, and added that Tyson is making "exceptional progress" toward its goal of making all its products free of antibiotics "important to human health" by the end of 2017.

Hayes came to Tyson Foods after the company purchased Hillshire Brands Co. of Chicago for $8.5 billion in 2014. There, he was chief supply chain officer, responsible for operations including procurement, manufacturing, food safety and quality, engineering, and logistics. Before that, he was senior vice president and chief supply chain officer for Sara Lee North America.

When questioned about the success of Tyson's Hillshire acquisition, Hayes said, "We're well-positioned, ready to do another Hillshire-sized acquisition again if it was available."

Hayes said the company's pre-tax return on investment capital is back up to 18 percent, and it was a little more than 20 percent before Hillshire was acquired.

He also said Tyson returned $1.7 billion in cash to shareholders through stock buyback and bumped its dividend by 50 percent last year and this year. It's at 90 cents for 2017, and the board has committed to an annual growth of at least 10 cents.

Hayes, already the company's president, will add the CEO title on Jan. 1. He said 2016 was a good year overall and the company expects its first quarter of the 2016-2017 fiscal year to be a "phenomenal" start.

"We see the first quarter of our fiscal year this year as being the best quarter Tyson's had in its history," Hayes said.

He said the company is seeing its beef and pork segments at above-average profit margins. The other two segments, chicken and prepared foods, are within an expected range.

Asked about a shift in consumer demand for fresh over frozen meet, Hayes called fresh meat a "huge growth driver" but said there has also been growth in frozen food.

He also described the success of the company's "Tyson Tastemakers" meal kits as "so far, so good."

Hayes also decried coverage of the Georgia Dock poultry prices. Georgia's Department of Agriculture is requiring poultry companies to submit weekly price affidavits that will be used to calculate the industry benchmark price.

The action comes as a response to an ongoing class action lawsuit against Tyson Foods and other companies that alleges price fixing since 2008.

Hayes said only 3 or 4 percent of Tyson's goods are priced that way and "it's really become sort of sensationalized to a degree. We view those [allegations] as an attack on our integrity as a company."

He said the same about the lawsuit, and noted that Tyson has a strong defense. The company has signed an affidavit saying its prices have been clear and accurate in the past and will be so into the future, Hayes said.

The publicly traded meat processor (NYSE: TSN) said the appointment of Schomburger, 54, was effective on Monday.

The move expands the size of the board from 10 to 11 members, with Schomburger serving as one of eight independent directors.

Schomburger joined P&G in 1984 as a sales representative and has since held numerous leadership positions for the $76 billion publicly traded consumer packaged goods firm, including president of its Global Walmart team from 2005 to 2015.

"Jeff's deep understanding of the branded consumer packaged goods business and his experience as a leader are among the reasons our nominating committee recommended him," John Tyson, the grandson of Tyson Foods' founder and chairman of the board, said in a news release. "We're pleased to have him on the board and look forward to his input as we continue to grow our branded food business."

]]>Tue, 06 Dec 2016 15:24:00 -0600http://www.arkansasbusiness.com/article/114457/procter-gamble-executive-joins-tyson-foods-board
http://www.arkansasbusiness.com/article/114457/procter-gamble-executive-joins-tyson-foods-boardTyson Foods Inc. of Springdale said Monday that it has launched a $150 million venture capital fund, called Tyson New Ventures LLC, as it seeks to invest in innovative food companies and technologies.

The publicly traded meat processor (NYSE: TSN) said the fund is focused on "investing in companies developing breakthrough technologies, business models and products to sustainably feed a growing world population." The company said the fund will complement other investments in its core businesses: fresh meats, poultry and prepared foods.

"We intend to collaborate with promising food entrepreneurs who are pioneering new products and technology that are making meaningful changes and improvement to food systems," Monica McGurk, executive vice president of strategy and new ventures and president of foodservice for Tyson Foods, said in a news release.

"We believe we can accelerate the growth of startups through our capabilities in such areas as food and culinary research and development, sourcing, insights, customer relationships and distribution. By doing so, we hope to materially advance the state of the U.S. and global food system."

The company said the fund will focus on three areas: commercializing alternative proteins; combating food insecurity and food loss; and promoting "more precise and productive resource application, safety and consumer empowerment in the food chain."

Tyson said its investment in the company will help Beyond Meat expand its product portfolio and distribution. The deal is the latest among legacy food giants getting involved in smaller food startups. Beyond Meat products, which include plant-based hamburger patties and chicken strips and single-serve prepared meals, are already available in 11,000 stores.

Tyson New Ventures will be based in Chicago and led by Mary Kay James, who has been named vice president and general manager.

James previously worked as managing director of DuPont Ventures, was chairperson of the National Venture Capital Association's Corporate Venture Group and an advisory board member to Global Corporate Venturing.

Tyson said James' team will seek startups "that complement Tyson Foods' existing business and product development efforts" and focus on alternative proteins, elimination of food waste and "leveraging innovative trends in technology."

"This fund is about broadening our exposure to innovative, new forms of protein and ways of producing food, while remaining focused on our core fresh meats, poultry and prepared foods businesses, which are also experiencing tremendous consumer demand and growth," McGurk said.

Joe Christian of Jonesboro, a row-crop rice and soybeans farmer, was elected as secretary/treasurer.

Delegates also re-elected six other board members during the final day of the organization’s 82nd annual convention at the Hot Springs Convention Center.

Veach, of Manila, begins a ninth term as president and is the 10th since the Bureau was formed in 1935. He is a third-generation farmer in the Lost Cane community near Manila.

"We're looking at some very difficult obstacles for our farmers and ranchers." Veach said in a news release. "One of the major ones is profitability. So we have to continue monitoring what we can do for trade, government regulations and providing a safety net for all of agriculture."

Hillman is a sixth-generation farmer of rice, soybeans and wheat from Carlisle who will also begin his ninth term.

The other board members re-elected to two-year terms were Terry Dabbs of Stuttgart, Tom Jones of Pottsville, Caleb Plyler of Hope, Rusty Smith of Des Arc, Leo Sutterfield of Mountain View and Dan Wright of Waldron.

According to the news release, delegates also also discussed the bureau's positions on revising the process the federal government uses to impose new "burdensome" regulations; proposals on the future of farm programs and the 2018 farm bill; revising rules governing risk management and federal crop insurance coverage; legislation that gives the State Plant Board the authority to regulate seed traits; encouraging the state Legislature to provide high-speed broadband to rural areas; improving transportation infrastructure for agricultural products; and urging higher education institutions to incorporate more agriculture and technical training.

]]>Mon, 05 Dec 2016 10:03:00 -0600http://www.arkansasbusiness.com/article/114426/arkansas-farm-bureau-announces-board-election-results
http://www.arkansasbusiness.com/article/114426/arkansas-farm-bureau-announces-board-election-resultsThe Arkansas Grown Program announced Monday that four free regional "Local Conversations" events, which aim to connect local farmers and producers with grocery store managers, chefs, restaurateurs and other consumers, are scheduled for January-February in Arkansas.

They’ll be held from 9 a.m.-1 p.m. on:

Jan. 12 at the University of Arkansas at Monticello’s University Center, 346 University Court.

According to a news release, the Arkansas Hospitality Association will be involved in each event to emphasize the relationship between agriculture and tourism, the state’s two leading industries. Also, Arkansas Grown is a program of the state Agriculture Department.

An panel, breakout groups and samples of locally grown produce will be part of each program. The goal is to provide networking opportunities and updates on trends and tips as well as to spark ideas.

Space is limited and seats are offered on a first-come, first serve basis.

]]>Mon, 05 Dec 2016 09:40:00 -0600http://www.arkansasbusiness.com/article/114425/arkansas-grown-announces-local-conversations-events
http://www.arkansasbusiness.com/article/114425/arkansas-grown-announces-local-conversations-eventsA new year bringing a new president, Donald Trump, is approaching and an old foe, Fidel Castro, is dead. What better time for a reset on U.S. relations — and Arkansas trade — with Cuba?

Fifty-plus years of the U.S. trade embargo against communist Cuba have failed to bring democracy to that island nation; instead, it’s penalized Arkansas businesses — particularly Arkansas farmers, particularly Arkansas rice and poultry producers — who would benefit greatly by trade with Cuba, as that nation would benefit from having access to these products.

We’ve applauded President Obama’s initiative to normalize relations, and the state’s congressmen and governor have pushed efforts to open Cuba to Arkansas trade. In September 2015, Gov. Asa Hutchinson, on an economic development trip to Cuba, said that Arkansas, with its access to the Mississippi River, stands to be among the top five states doing business with the country.

Hutchinson, addressing the Arkansas Farm Bureau last week, observed the opportunity that Castro’s death afforded, both for trade and to promote freedom, saying, “It’s like expectations went up.”

Our pragmatic governor also discussed the phone conversation he had with President-elect Trump last week, telling the farmers he had tried to educate him about the importance to farmers of exports and the importance to the nation of farmers.

Castro’s death prompted one of Trump’s notorious tweets: “If Cuba is unwilling to make a better deal for the Cuban people, the Cuban/American people and the U.S. as a whole, I will terminate deal.” And now a man who campaigned on his deal-making ability will be in a position to do Arkansas businesses and farmers a great service by working a deal that opens Cuban markets to Arkansas exports and opens Cuba to free market principles.

]]>Mon, 05 Dec 2016 00:00:00 -0600http://www.arkansasbusiness.com/article/114398/the-art-of-the-cuban-deal-editorial
http://www.arkansasbusiness.com/article/114398/the-art-of-the-cuban-deal-editorialTom Hayes, 51, joined Tyson Foods after the company purchased Hillshire Brands Co. of Chicago for $8.5 billion in 2014. Hayes had been chief supply chain officer at Hillshire and was named president of food service at Tyson after the acquisition. He was promoted to chief commercial officer in 2015 and president of the company in June 2016.

Hayes has held executive positions with Sara Lee North America and U.S. Foodservice Inc. and management positions with several companies, including ConAgra Foods and Kraft Foods.

Hayes earned a bachelor’s degree in psychology from the University of New Hampshire and an MBA from Northwestern University in Evanston, Illinois.

It’s been exciting. There’s so much opportunity to be a company like no other in our industry. We’ve been working hard to come together as one team that combines a powerful supply chain and industry-leading marketing. There has been a lot of assessment done around best practices between the two companies, and we have been focused on making the right talent choices for long-term success. We’re transforming, and at times that can be difficult, but generally it’s been a source of energy.

How would you describe your leadership philosophy, and what influenced it?

My leadership philosophy is to create great leadership teams top to bottom, teams that have the right amount of process discipline and a full dose of trust. Highly effective teams tackle opportunities and challenges with speed and efficiency, and develop talent throughout the organization that not only delivers performance but does it in the right way.

I have had 29 years in the industry seeing great leaders get great results, in addition to poor leaders getting great results but getting them in a way that wasn’t respectful to their teams. Everyone has the right to feel respected and fulfilled at work if they hold up their end of the bargain, and I believe that most people start from a place of positive intent.

You are one of several high-profile Hillshire executives who are now making their marks at Tyson. How has that transition gone?

Frankly, I don’t think about being a “former Hillshire” executive too much. Hillshire was only 2 years old when the acquisition happened, so the culture was just emerging. The transformation of coming together as one team has been going really well by just about any measure.

How have the new voices, so to speak, changed or improved the existing Tyson culture?

I can’t say any one group has cornered the market on great ideas. I love what I see happening at our company. We have the pleasure of working for a company with a rich collective heritage that is immensely diverse. We are finding the diversity of our people, their backgrounds and their points of view are a treasure trove that we’re just starting to mine. Our expertise in fresh and frozen foods is in line with what consumers crave and what our customers are anxious for us to support. Our team members are excited about taking full advantage of every opportunity ahead of us.

Maintaining focus on what matters most will be a challenge, but hey, we’ll take that over the alternative any day.

How comfortable are you as the new voice in a long successful company?

Tyson Foods is not built around any one person. From our front line workers to the leadership team, everyone has a voice. I have the honor of being the spokesperson and team leader in many instances, but my role is to make sure I leverage the collective power of all 114,000 team members. I feel so fortunate to be able to play a leadership role at Tyson. It’s a great responsibility and a great honor — every day.

You have worked for many companies during your career. What about Tyson surprised you or impressed you?

The most impressive thing about our company is the breadth of skills and resources we have to satisfy consumers and customers.

I’ve been with what is now Tyson Foods for 10 years. Earlier in my career I worked for companies that had pockets of greatness, but none with the end-to-end power of this company to help customers grow. I’ve also been surprised by the openness of our team members to new ideas. Our team consistently pushes themselves to think differently — and that’s something we can build on.

What was your biggest career mistake and what did you learn from it?

I’ve made a lot of mistakes in my career. I try not to make the same ones twice, but I know that failing fast is a part of what makes a healthy, growing company.

The mistakes that stand out to me are being too slow to make talent moves that in my gut I know are right. The right choices are usually fairly apparent. I’ve learned that being decisive on key people moves that are in the best interest of the enterprise is one of the most important things a leader can do.

Tyson is making a strong move into branded prepared food, and the early results are certainly promising. What are the company’s expectations of becoming a “hybrid” provider of prepared food and fresh meats?

Our expectations are to continue to drive expansion in growing categories in all of our businesses. We are fortunate to have a large consumer business in addition to a large and healthy food service business. As a result, we’re focused on anticipating consumer needs regardless of the channel. We want to delight consumers whether they’re enjoying our great products at restaurants or buy them for home use from our retail partners.

At retailers, our industry has been known as “consumer package goods.” We believe a better description of where we’re headed is being the industry’s best “consumer fresh goods” company. We bring unmatched capabilities to drive growth with our customers, and we aim to help them succeed in both fresh and prepared foods.

Local food sourcing and humane treatment of animals have become important issues in the food industry. What is Tyson doing in these areas, and how can it be better?

We believe we can always be better in everything we do. We have a culture that is committed to continuous improvement. Transparency in the way food is made through the supply chain is something that today’s conscious consumer is demanding. We’re actively engaged in not only understanding consumer preferences but making sure we are continuously improving our supply chain practices. We are committed to the humane treatment of animals and operating as good stewards of our environment.

Our corporate social responsibility agenda is rooted in the belief that Tyson Foods can lead the industry in building the most sustainable supply chain at scale that delivers high-quality, affordable foods that consumers love. That’s a tall order, but we believe we have the talent and assets to do it.

How did you get involved in this industry?

I started working in the food business in high school at a restaurant in New Hampshire. I was its first dishwasher, but by the time I graduated I was a sous chef and was hooked. After college, I worked in sales for a dairy company and, as they say, “the rest is history.” I love the hardworking, fun-loving nature of people in the food business. It’s really a special industry.

What is the best advice you received in your life, either professionally or personally?

The best advice I have ever received was to take your work really seriously, but not take yourself too seriously. Work and fun can and should go hand in hand. An engaging culture where people feel challenged and accomplished and at the same time truly enjoy each other’s company is the goal.

]]>Mon, 05 Dec 2016 00:00:00 -0600http://www.arkansasbusiness.com/article/114389/incoming-tyson-ceo-tom-hayes-not-starting-from-scratch
http://www.arkansasbusiness.com/article/114389/incoming-tyson-ceo-tom-hayes-not-starting-from-scratchWASHINGTON - American consumers and businesses would pay - literally - if President-elect Donald Trump followed through on his campaign pledge to slap big taxes on imports from China and Mexico.

Trump said during the campaign that he'd impose tariffs of 35 percent on Mexican imports and 45 percent on Chinese imports to protect American jobs from unfair foreign competition. Companies that import those goods would pay the tax at the border.

Many of those firms would likely try to heap as much of the cost as possible on their customers. The result is that American consumers could end up paying more for foreign-made clothing, tablet computers and other electronics.

A 45 percent tariff on Chinese-made goods could drive up U.S. retail prices on those goods by an average of about 10 percent, Capital Economics has calculated. Consumers would find it hard to escape the price squeeze.

"There are few alternative sources for the main products the U.S. buys from China," says Mark Williams, Capital Economics' chief Asia economist. He notes, for example, that China supplies about 70 percent of the world's network equipment, cellphones, laptops and tablet computers.

Since Trump's election, his team has de-emphasized the use of tariffs, describing them as a potential tool to be used to pry concessions from America's trading partners.

"Everybody talks about tariffs as the first thing," Wilbur Ross, an investment banker who is Trump's choice for Commerce secretary, told CNBC Wednesday. "Tariffs are part of the negotiation."

They would also be risky. Tariffs could ignite a trade war if, as expected, China and Mexico retaliated by imposing tariffs or other sanctions of their own on the United States.

Analysts say Trump might rethink his tough trade talk once he fully weighs the costs - not all of which would be economic. A trade war would likely have diplomatic consequences, making it harder, for example, to enlist China's help in trying to defuse the threat from North Korea's nuclear ambitions.

"It will only result in collateral damages to both sides," says economist Song Lifang of Renmin University in Beijing.

Even without a broader conflict, tariffs can damage corporate America. Back in 2002, President George W. Bush imposed tariffs of up to 30 percent on imported steel. American steel producers took advantage of the tariffs to raise their own prices, thereby squeezing U.S. industrial companies that buy steel. The Consuming Industries Trade Action Coalition, representing steel buyers, has said the tariffs cost thousands of U.S. jobs.

"That was an awful thing for us," says Bill Smith, president of Termax Corp. of Lake Zurich, Illinois, which makes fasteners for the auto industry. "We are pretty nervous here at Termax" that Trump will target Chinese steel with tariffs again.

Smith says Termax wouldn't be able to pass along the higher cost to its automaker customers - "They can just choose to use a different (foreign) manufacturer" - and would have to absorb the costs itself.

Ford Motor CEO Mark Fields warned on CNBC last month that a 35 percent tariff on imports from Mexico, where Ford is building its Focus compact car, "would affect the entire auto sector."

Trump's proposed tariffs reflect frustration over the trade deficits in goods the United States runs with China ($367 billion last year) and Mexico ($61 billion). The deficit is the gap between the value of the goods the United States exports and the larger value of the goods it imports.

China's Global Times newspaper, published by the ruling Communist Party's People's Daily, speculated that if Trump's proposed tariffs are enacted, "China will take a tit-for-tat approach."

"A batch of (U.S.) Boeing orders will be replaced by (Europe's) Airbus," it said. "U.S. auto and iPhone sales in China will suffer a setback, and U.S. soybean and maize imports will be halted."

Farmers in Mississippi, Missouri, Tennessee and Arkansas would suffer if China targeted American soybeans in retaliation for any Trump tariffs, according to the Peterson Institute for International Economics. It said rural Sharkey County, Mississippi, could lose up to 40 percent of its jobs.

Beijing could also restrict access to finance and other service industries, says Zhou Nianli, a professor at the China Institute for World Trade Organization Studies at the University of International Business and Economics in Beijing.

"If he really put what he claimed during the campaign into practice," Zhou says of Trump, "China may create trade barriers for U.S. service industries that are thirsty to get into China's markets."

At Termax, which employs 435 U.S. workers, Smith also worries that a trade dispute with China would jeopardize his company's access to rare earth magnets it buys exclusively from China.

The Trump transition team declined to respond on the record. But his team has argued that fears of a destructive trade war are overblown. Trump advisers Ross and Peter Navarro, an economist at the University of California, Irvine, wrote in September that the "fear-mongering fails to understand the negotiating power of the U.S."

The threat of tariffs, they wrote, is a tool to compel others to abandon unfair trade practices: "All of the countries now running major trade surpluses have far more to lose by disrupting trade."

Navarro and Ross disputed the Peterson report that predicted big potential losses for U.S. soybean farmers.

"We are world's largest producer, and they are the world's largest consumer ," they wrote of China. "If China cuts off American farmers, Chinese people will go hungry."

Tariffs are meant to give American-made products a price advantage by making their foreign competition more expensive. They have had a disreputable image since the United States' Smoot-Hawley Tariff Act of 1930 disrupted trade during the Great Depression.

Economist Barry Eichengreen of the University of California, Berkeley, has argued that tariffs aren't necessarily flawed policy. At times when inflation is too low - as it's been in the United States and Europe since the Great Recession began in 2007 - tariffs can raise prices and encourage consumers to spend to avoid paying more later. Such spending helps drive economic growth. Higher inflation can also make it easier for consumers and businesses to repay loans.

Still, even Eichengreen cautions that there are more effective ways than tariffs to lift prices - notably old-fashioned stimulus through tax cuts and stepped-up government spending, both of which Trump is also proposing.

Many analysts say the United States should also develop more efficient ways to help American workers who lose jobs to foreign competition - in part through expanded training programs - rather than punishing foreign competitors.

Tariff disputes can take unexpected turns.

In 2009, the Obama administration imposed tariffs on tires from China, charging that a surge in Chinese imports was hurting American tire makers. Beijing fired back by imposing a tax of up to 105 percent on U.S. chicken feet - a throwaway item in the United States that's considered a delicacy in China.

Gary Hufbauer and Sean Lowry of the Peterson Institute found that the tire tariffs probably saved 1,200 jobs in the tire industry. But consumers paid more than $900,000 in higher prices for every job saved.

Overall, Peterson estimates that Trump's policy could trigger a trade war that would throw the United States into recession and wipe out 4 million jobs.

"A lot of us are hoping that his overriding need to grow the economy and create jobs will soften and mitigate some of the more harmful actions he could take on the trade front," says Joshua Meltzer, senior fellow at the Brookings Institution.

(Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

]]>Thu, 01 Dec 2016 11:29:00 -0600http://www.arkansasbusiness.com/article/114374/for-americans-trumps-tariffs-on-imports-could-be-costly
http://www.arkansasbusiness.com/article/114374/for-americans-trumps-tariffs-on-imports-could-be-costlyThe U.S. economy grew at modest pace, according to the Federal Reserve's latest survey of business conditions, released Wednesday.

The central bank, which has not raised interest rates in a years, is expected to raise a key interest rate at its December meeting.

Seven of the 12 Federal Reserve Districts in the survey known as the "Beige Book" described growth as modest to moderate.

In the St. Louis District, which includes all of Arkansas and parts of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee, the report said economic conditions have modestly improved.

Of the businesses surveyed, 40 percent reported employment was higher or slightly higher than at the same time last year, and more than half expect their firm to increase employment over the next 12 months, but many said they had trouble finding workers with the skills they required.

More than half of those surveyed reported wages were higher or slightly higher than during the same period last year, and 60 percent reported increasing wages and salaries to attract or retain employees.

Consumer prices increased modestly.

The following are excerpts from the St. Louis District report.

Consumer Spending

"Reports from general retailers, auto dealers and the hospitality industry paint a mixed picture of consumer spending activity in the district...Multiple auto dealers across the district also reported a slowdown in sales, which some attributed to the uncertainty caused by the presidential election. Most dealers expect an increase in sales and inventory in the next quarter. In addition, several dealers also noted a shift in demand toward used vehicles. Contacts in the hospitality industry in East Arkansas continued to report favorable occupancy rates."

Manufacturing

"Manufacturing activity has increased modestly since our previous report...Several companies reported capital expenditure and facility expansion plans in the district, including firms that manufacture transportation equipment, machinery and fabricated metal products. In particular, an aircraft manufacturer announced a large, multi-year expansion. Reports from manufacturers of paper products were mixed. One manufacturer of pulp products for the personal care industry announced a major investment in new machinery to meet demand, while a manufacturer of paperboard products for packaging announced a plant closure. In the steel industry, contacts reported that increased demand from the automotive sector has partially offset the decline in demand from the energy sector, but that oversupply remains a concern."

Other Business Activity

"Several firms that provide information technology services, leisure and hospitality services, and health care announced plans to build new facilities or expand current facilities and hire new employees. Reports from retail services were mixed, with restaurant and grocery store closings and openings reported across the district. Reports from the transportation sector were positive. A Memphis contact reported revenues are up, and Little Rock contacts reported shipment increases outperforming seasonal highs."

Real Estate & Construction

"Year-to-date home sales remained strong in all four MSAs, increasing by 10 percent in Little Rock, 7 percent in Louisville, 8 percent in Memphis, and 5 percent in St. Louis compared with the same time last year. Most real estate contacts reported fourth-quarter demand for single-family homes has remained flat, but more than half expect demand to increase slightly in the first quarter of 2017. Residential construction has strengthened moderately since our previous report.

"Commercial real estate activity has improved modestly since our previous report. Most survey respondents reported that demand for office and retail properties was about the same or slightly higher than a year ago, while a slim majority indicated that demand for industrial properties has been slightly higher. These trends are expected to continue in the coming months. Commercial construction activity increased modestly, as a majority of local construction contacts indicated an increase in demand for office and retail properties so far in the fourth quarter; they also expect demand to carry into the first quarter."

Banking & Finance

"A survey of district banks indicates growth in loan demand during the current quarter with some signs of slowing demand in the first quarter of 2017. District bankers reported that demand for mortgages and commercial and industrial loans has been strong during the fourth quarter. Contacts expect strong demand for commercial and industrial loans to continue into 2017; however, there was an uptick in the number of bankers expecting the demand for mortgages to slow slightly in early 2017. The demand for auto loans has been generally unchanged; again, there was an uptick in the number of bankers expecting the demand for auto loans to slow slightly."

Agriculture & Natural Resources

"Forecasted corn and rice production are now slightly lower than projected in September. Meanwhile, cotton and soybean production forecasts are up slightly. Overall, contacts believe production levels will not provide any relief from the environment of low crop prices, which means farmer solvency issues will only worsen heading into the next crop year. Year-to-date coal production through October is down 20 percent from one year ago. However, October coal production is up 10 percent from the September level and slightly higher than one year ago. Contacts noted that the outlook has improved modestly in recent weeks; however, the supply and low price of natural gas continues to temper long-run growth prospects."

The Fed's survey of economic conditions around the country found that seven of its 12 districts described growth as modest to moderate. Another three districts — Philadelphia, Cleveland and Kansas City — saw a "slight" pace of growth. Richmond viewed activity as mixed, and New York said activity had been flat.

The survey, known as the "BeigeBook," will be used when Fed officials meet on Dec. 13-14. The central bank is expected to raise a key interest rate slightly in response to steady gains in employment and a modest pickup in inflation. The Fed has not raised rates in a year.

A majority of districts reported higher retail sales, especially for clothing and furniture. These gains helped to offset a slowdown in sales of new autos. Some districts noted a shift in purchases from new cars to used vehicles.

Manufacturing demand was described as mixed, with some weakness attributed to lingering effects from the rise of the dollar, which makes U.S. products less competitive in overseas markets.

The dollar's strength has been a drag on manufacturing for most of this year. The report said that the strong dollar remained a concern for exporters in the Boston, Dallas and San Francisco districts. But manufacturers of chemicals, autos, aerospace products and the electronics industry in various regions reported signs of a rebound in demand.

The strong dollar was dampening sales for some farm products. San Francisco noted that the strong dollar was continuing to hold back exports of agricultural products, particularly apples and pears.

Farmers around the country were generally satisfied with this year's harvests, although the Richmond district reported the loss of 4 million to 5 million birds killed by Hurricane Matthew and related floods.

Seven districts — Boston, New York, Philadelphia, Atlanta, Chicago, St. Louis and Dallas — reported that the demand for workers was increasing, giving a boost job seekers. Wage growth was still generally described as modest, although some districts said there were scattered reports of rising wage pressures for select in-demand occupations.

The Fed boosted its benchmark rate by a quarter-point last December to a range of 0.25 percent to 0.5 percent. Until then, it held the rate a record low near zero for seven years in an effort to help the economy recover from the worst recession since the 1930s.

Many economists believe if the Fed raises rates in December, it will increase rates another two times in 2017. But some analysts believe rates could go up even faster next year if President-elect Donald Trump is successful in his efforts to cut taxes cuts and spend more on infrastructure projects. Those policy moves could boost inflation pressures.

(Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

]]>Wed, 30 Nov 2016 14:57:00 -0600http://www.arkansasbusiness.com/article/114363/feds-beige-book-reports-modest-growth-around-nation
http://www.arkansasbusiness.com/article/114363/feds-beige-book-reports-modest-growth-around-nationHOT SPRINGS - Gov. Asa Hutchinson says he stressed the importance of a global market to Arkansas' economy when he talked with President-elect Donald Trump to congratulate him on his surprise win in the election.

The Republican governor told members of the Arkansas Farm Bureau on Wednesday that he talked with Trump a day earlier and said he told the incoming president that he would support the administration outside Washington. Hutchinson, a former congressman and federal Homeland Security administration official, has said he's not interested in serving in a Trump administration.

Hutchinson praised Trump's Cabinet picks and said he expected the Republican to give Arkansas and other states more flexibility in how they spend federal dollars. He said he didn't think the Trump White House would treat mid-America as "fly-over country."

(Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

]]>Wed, 30 Nov 2016 14:28:00 -0600http://www.arkansasbusiness.com/article/114362/hutchinson-says-he-stressed-global-market-in-talk-with-trump
http://www.arkansasbusiness.com/article/114362/hutchinson-says-he-stressed-global-market-in-talk-with-trumpWASHINGTON (AP) — The U.S. economy in the third quarter grew at the fastest pace in two years, with a revised report showing stronger consumer spending than first estimated.

The gross domestic product, the country's total output of goods and services, expanded at an annual rate of 3.2 percent in the July-September period, the Commerce Department reported Tuesday. That is up from a previous estimate of 2.9 percent.

The revision was significantly better than the meager gains of 0.8 percent in the first quarter and 1.4 percent in the second quarter when the economy was being held back by a strong dollar and weak business investment.

The 3.2 percent increase was expected to be the best showing for the year. Economists believe growth has slowed to around 2 percent in the current quarter. At the moment, they forecast growth of around 2 percent to 2.5 percent for 2017.

But analysts caution that the outlook for next year could shift significantly based on policy changes — such as tax cuts and higher trade tariffs — that President-elect Donald Trump has promised to implement.

"Uncertainty regarding our forecasts is higher than usual given expected fiscal and trade policy changes under the new administration," said Barclays economist Blerina Uruci.

The latest look at GDP, the second of three estimates from the government, showed that consumer spending grew at a 2.8 percent rate in the third quarter, better than the 2.1 percent advance first estimated. The new-found strength reflected more spending than initially thought in such areas as auto purchases and utility bills. Still, consumer spending, which accounts for 70 percent of economic activity, slowed from a gain of 4.3 percent in the second quarter.

Other areas of strength were in export sales, which grew at a 10.1 percent rate. Although the figure partially reflected a temporary surge in exports of soybeans, economists are hopeful that exports will show further gains in the months ahead. Earlier in the year, American manufacturers were battered by a strong dollar which made their goods more expensive on overseas markets.

The 3.2 percent GDP gain, the best showing since a 5 percent advance in the third quarter of 2014, is not expected to last. Analysts believe growth will slow to a still-solid 2 percent rate in the current quarter as a temporary boost from business restocking of store shelves fades. The swing in inventories added 0.5 percentage point to growth in the third quarter, while the improvement in trade added 0.9 percentage point to growth.

For the year, the economy is expected to grow a modest 1.5 percent, down from 2.6 percent growth in 2015 — the best performance in the seven years since the Great Recession ended in mid-2009.

While GDP growth is expected to slow, analysts still expect the Federal Reserve to boost a key interest rate at their meeting later this month. It would mark the first rate hike since the Fed boosted its benchmark rate by a quarter-point a year ago.

During the recent campaign, Trump decried what he saw as a sluggish economic recovery under Obama, with GDPgains averaging around 2 percent since the end of the recession. Trump said he wanted to set a national goal of reaching 4 percent growth during his administration.

Most economists think that may be overly optimistic given the mass retirement of baby boomers, which would weaken growth in the labor market, and very tepid productivity growth.

Some economists have said they will boost their GDP forecasts if Trump is successful in getting Congress to pass his package of tax cuts and increased spending in such areas as defense and infrastructure projects. But their current estimates put growth at around 2.5 percent over the next two years, an improvement from their current forecast of growth next year of around 2 percent, but well below Trump's 4 percent target.

By major categories, business investment in new plants and equipment edged up at an annual rate of just 0.1 percent in the third quarter. This sector has been held back by steep cutbacks in spending by energy companies responding to the plunge in oil prices. Government spending increased a slight 0.2 percent as a gain at the federal level offset cutbacks at the state and local level.

(Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

]]>Tue, 29 Nov 2016 10:17:00 -0600http://www.arkansasbusiness.com/article/114345/us-economy-grew-at-32-percent-in-3q
http://www.arkansasbusiness.com/article/114345/us-economy-grew-at-32-percent-in-3qJONESBORO - Northeast Arkansas is home to one of the largest distributors of agricultural aftermarket parts in North America. Soon it will be even bigger.

The Jonesboro Sun reports SMA of Jonesboro entered into an agreement last week to acquire certain assets of Blount International's TISCO aftermarket parts business. The sale is expected to be finalized in late December.

For the Hurt family of Jonesboro, it's a big deal.

It solidifies SMA as the second largest distributor in the country after a subsidiary of John Deere, said Blant Hurt, chief marketing officer and co-owner.

Few people are aware of the company because its customers are retail stores, President Rodger Hurt said.

"Our customers are farm stores, implement dealers, repair shops, really throughout North America," Rodger Hurt said. The company has four distribution facilities around the country. In addition to a warehouse in Jonesboro, the company has facilities in Corsicana, Texas, Des Moines, Iowa, and Fresno, California. It will add two more with the addition of TISCO, he said.

Founded in 1964 by Bill Hurt Sr. and son Bill Hurt Jr., SMA supplies more than 15,000 agricultural parts and accessories. TISCO offers about 16,000 ag parts.

The TISCO brand can be found in such places as Tractor Supply and other stores around the country.

"Our acquisition of TISCO will allow us to improve service to our customers in many ways," Rodger Hurt said. "In particular, service will be enhanced through expanded distribution, more intensive field representation, and of course, added breadth to our product offering. It's a good fit. TISCO has deep roots as a focused, family run business, as do we."

TISCO was founded in 1937 by the Calmenson family of Minnesota. At one time, it was the No. 1 name in farm parts.

The family sold the company in 1999. It changed hands multiple times in the years since then, the Hurts said. It became part of Blount International only a few months ago when a private equity company bought it. Blant Hurt said a representative of another private equity firm was talking to his family about possibly buying SMA. That rep happened to mention TISCO was for sale.

Instead of selling, the Hurts decided they wanted to buy.

While TISCO had long been a big deal in its field, as part of the larger company, the brand had begun to suffer, the Hurts said.

"It was getting lost in the shuffle," Rodger Hurt said of TISCO. "It didn't really make sense to their big picture, what they were trying to do with Blount International, and so, for that reason, they decided to sell it."

SMA employs 100 people, including 65 in Jonesboro. While it won't happen immediately, the Hurts said acquisition of TISCO will eventually create 15 to 20 more jobs here.

(Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

]]>Mon, 28 Nov 2016 06:57:00 -0600http://www.arkansasbusiness.com/article/114333/sma-of-jonesboro-to-buy-blounts-aftermarket-parts-business
http://www.arkansasbusiness.com/article/114333/sma-of-jonesboro-to-buy-blounts-aftermarket-parts-businessRobert Foster grows emotional when asked to explain why he left Bad Boy Mowers, the Batesville maker of zero-turn commercial lawn mowers he co-founded in 1998 with business partner Phil Pulley. He’ll only allow as to how there was a “split” in the company, and in 2013, Bad Boy bought Foster out.

“I don’t want to talk about people, and it’s very — emotionally, I don’t want to go there,” he says in an interview earlier this month at Intimidator Inc., the manufacturer of utility vehicles — and, more recently, zero-turn lawn mowers — that Foster started in August 2013. “It was not a good situation.”

Maybe a thousand feet as the crow flies separates the Intimidator plant from the Bad Boy facility in the Independence County Industrial Park. And though Intimidator is the startup, it lays claim to the 1 Bad Boy Blvd. address; Bad Boy is at 102 Industrial Drive.

“It was something that devastated me,” Foster says of the split. “It was the hardest thing I’ve ever gone through in my life.”

In essence, you were pushed out of Bad Boy? “Yeah.”

So what caused you to return to manufacturing? There’s a long pause. Foster is fighting to stay composed. Finally, “For our employees. I had 38 families depending on me.” He explains:

“We had 38 employees and I really at that point didn’t think I would ever build anything else again, ever. I went through a depression period, where I thought I would never, never be in business again. I just kept thinking that these people have — gave so much to me and my wife that I felt that we had to produce.”

In August 2013, Bad Boy Mowers celebrated the completion of a $7.4 million expansion allowing the company to build new multiterrain vehicles, or MTVs. On Aug. 7, 2013, an Arkansas Economic Development Commission press release about the completed expansion described Intimidator Inc. as an affiliated company of Bad Boy. “Through the expansion, which Bad Boy originally announced in 2012, more than 200 new jobs will be created in the next 3 to 5 years,” the release said.

In August 2013, Foster took the 38 Intimidator employees and launched Intimidator as a separate company. In November 2013, he sold all of his shares in Bad Boy.

In October 2015, at the Green Industry & Equipment Expo, a major trade show for outdoor power and lawn and garden equipment, Foster debuted his Spartan Mowers, manufactured by Intimidator. He started shipping Spartan mowers in February 2016.

On Sept. 7 of this year, Bad Boy Inc. sued Spartan Mowers in federal court in Batesville, alleging that Spartan had infringed on a Bad Boy patent for lawnmowers.

Foster invented and received the patent for the “Independent Four Wheel Vibration Damping System for Riding Mowers.” But, Bad Boy said in its lawsuit, Foster had assigned “all rights, title, and interest in the patent application” to Bad Boy.

On Oct. 20, Spartan Mowers answered Bad Boy’s lawsuit, denying that Foster had assigned his interests in the patent to Bad Boy.

Two phone calls and emails to Bad Boy asking to hear its side of the split weren’t returned. And though Foster understands the interest in a story that finds former business partners now competing head-to-head in a small Arkansas city, he doesn’t want to dwell on that aspect, preferring to discuss his plans for Intimidator and, in particular, for Spartan.

Batesville Mayor Rick Elumbaugh isn’t keen to discuss the rivalry. “We as a city look for growth and we look for economic development,” he says. “If both of them do well, the city of Batesville does well.”

‘Unbelievable’ DemandA couple of years after starting Intimidator, Foster says, he came to a realization. “After 18 years in the mowing industry, I thought I might just go ahead and build another mower, because I can take everything that I’ve learned and what everybody wanted through all these years” and build a mower incorporating all that knowledge and all those desires.

Foster’s company manufactured about 3,000 Intimidator UTVs in 2015. He’d projected building about 800 Spartan mowers in 2016, but “we’re probably going to do about 3,500.” Demand, Foster says, has been “unbelievable.”

“Everybody knows me in the industry. They know my love and passion, that it’s what I love. And we’ve just got a really good price. We’ve got something that’s different, that no one’s ever seen before. It’s a different look,” he says. “People will kid about we have Spartans that don’t have yards, just to have them in their garage because they look cool.”

“Everyone says that if Batman had a mower, it would be a Spartan,” Foster says.

Foster appreciates ‘60s-era muscle cars, and “I kind of took the theme of that muscle car look, real curvy, that all-steel look.” He waxes dreamy when discussing the Spartan. “They have steel-belted radial tires, which have never been seen before in the mowing industry. We have smart-ride technology for an all-independent ride. We have GT track. Traction is very important in the mowing industry for hillsides and inclines. These machines are extremely good on traction control.”

And then, he says, “our price is just unreal,” meaning affordable for what the mower delivers. The price of a Spartan ranges from $4,799 to $9,999.

The Intimidator Group is the umbrella company under which Intimidator UTVs and Spartan Mowers are sold. Robert and Becky Foster also own Bad Dawg Accessories, which provides aftermarket accessories for UTVs, and Gourmet Guru Grill, a ceramic grill. Together, their ventures employ 180, Foster says.

Intimidator occupies several buildings, totaling about 144,000 SF, in the industrial park. Batesville, birthplace of Nascar legend Mark Martin, has a skilled manufacturing workforce. In addition to Bad Boy, which employs about 700, the town is home to a number of automotive machine shops and a couple of race car makers, which have attracted skilled craftsmen like welders.

Intimidator is receiving economic incentives from the state, which, Foster says, is facilitating the $12 million expansion announced in September. “It will make a difference in how many people we employ this year,” he says.

Intimidator currently uses five lasers to build its products but needs a sixth, and the company hopes that by February it will be able to build the frames and decks for its mowers 100 percent robotically, Foster says.

A robot can build 30 decks or frames per shift, he says, compared with nine or 10 manually manufactured.

New hires earn more than $10 an hour, Foster says, but within 18 months are earning more than $16 an hour. He and his wife, Becky, who serves as Intimidator’s operations manager — “She pretty much runs the place,” Robert Foster says — are working on establishing a profit-sharing arrangement for Intimidator’s employees.

In 2013, the first year that Intimidator was open, revenue totaled about $5 million, Foster says. He projects revenue approaching $50 million this year. The company is operating close to capacity. “We could use a 300,000-SF facility right now,” Foster says.

Intimidator now has 60 dealers and Spartan close to 80, he says. Intimidator is in a partnership with Mahindra USA, a tractor manufacturer, to make UTVs under the Mahindra brand, but “we’re growing the mower side of it faster,” Foster says. Spartan got a big boost when Riggs Cat of Little Rock picked up the line.

Lifelong LoveFoster literally built his first mower — the foundation of Bad Boy — in his home garage. Now he becomes ever more animated as he explains the intricacies of mower design — traction control and balance — and how he built the first Spartan mower at his house so no one could see what he was building. He scrupulously notes he had the help of his nephew, Adam Branscum, and employee Gus Munoz, as they worked nights and on weekends on the mower.

Foster, who grew up in Thida, about 30 miles from Batesville, always loved building things. At 8 or 9, he would accompany his father, who had a Dr Pepper route, on his calls, and “I would literally drive him crazy at all the stores that had equipment. I would just go crazy over looking at the equipment. I can remember at an extremely young age cutting out mowers out of magazines.”

At 12, Foster met his future wife, then 11, who lived in Olyphant (Jackson County). “She was capping strawberries on the front porch.” He was 17 and Becky was 16 when they married. They still attend church at Olyphant.

Foster still remembers the first time they could afford to fill up the gas tank of their car. They’d been married about a year. He says those habits of frugality remain.

When asked what’s next for Intimidator and Spartan, he says, “We have lots of new stuff for ‘18. When new stuff stops, the fun stops. 2018 will be the year for UTVs. We have a lot of really exciting things coming out in ‘18.”

Foster deflects questions about any possible tension arising out of his company manufacturing mowers just a few hundred feet from where the Bad Boy company he co-founded makes its products.

“We just try to focus on what we do,” he says. “We don’t really focus on anyone else besides what our goals are. Our goal is to have the best product on the planet for the best price. Our goal is to be the No. 1-selling mower company in the world.”

]]>Mon, 28 Nov 2016 00:00:00 -0600http://www.arkansasbusiness.com/article/114319/spartan-battles-bad-boy-mowers-on-shared-turf-in-batesville
http://www.arkansasbusiness.com/article/114319/spartan-battles-bad-boy-mowers-on-shared-turf-in-batesvilleTyson Foods Inc. of Springdale reported fourth-quarter results Monday, and the less-than-expected profit statement caused shares of the company to drop more than 15 percent in early morning trading.

Tyson announced revenue of $9.2 billion in the fourth quarter of 2016, down from $10.5 billion in the same quarter a year ago. Income was $391 million, up from $258 million, and earnings per share rose to $1.03 from 63 cents in the fourth quarter of 2015.

Analysts had expected revenue of nearly $9.4 billion and earnings per share of $1.17. Tyson also revised its EPS expectations of 2017 to between $4.70 and $4.85, while analysts had projected $4.98.

Revenue for fiscal year 2016 dropped to $36.9 billion from $41.4 billion in 2015. Income was up in 2016 to $1.8 billion from $1.2 billion in 2015, and earnings per share also rose, from $2.95 to $4.53.

Sales in all four of Tyson's major segments were down in the quarter and for the fiscal year because of lower demand:

Chicken was down 10.1 percent to $2.8 billion for the quarter, and down 2.6 percent to $10.9 billion for the year

Beef was down 7.4 percent to $3.5 billion for the quarter, and down 1.1 percent to $14.5 billion for the year

Pork was down 6.8 percent to $1.2 billion for the quarter, and down 2.5 percent to $7.3 billion for the year

Prepared foods was down 4.8 percent to $1.8 billion for quarter, and down 2.8 percent to $7.3 billion for the year.

Smith praised the company's performance, saying it had record years in metrics such as operating income, operating margin and operating cash flow. Tyson repurchased 28 million shares of its stock for $1.7 billion in 2016, and the board of directors announced a quarterly dividend of 22.5 cents on Thursday.

Smith said the first seven weeks of the first quarter of fiscal 2017, which Tyson would report in February, were "phenomenal."

"2016 was a great year, beyond setting records," Smith said. "We made tremendous progress. We are well positioned for even more success in 2017."

President Tom Hayes, who will replace Smith as CEO on Dec. 31, said the company would invest $1 billion for capital expenditures in the next fiscal year. Hayes said the investments would be to continue to build the long-term, sustainable success of Tyson.

"2016 was a great year but more importantly we laid the foundation for 2017 and beyond," Hayes said. "We're capitalizing on our momentum and taking a systematic approach to success."

Smith, who has been CEO of Tyson Foods since November 2009, will be available to consult with the company for a three-year period, the company said in a news release. Smith, in a filing with the U.S. Securities & Exchange Commission, said he would resign from the board Dec. 31.

"Tom Hayes is a proven leader who has played an important role in creating today's Tyson Foods and driving growth across our company," said John Tyson, chairman of the board. "The plan we have announced today will result in a smooth leadership transition that positions Tyson Foods for continued growth and innovation."

John Tyson said the decision to name Hayes now was based on "his track record and how his skills align with the company's strategic direction and continuing evolution." He said Hayes had the ability to push the company "further into developing markets, new product categories and proprietary food experiences."

"I am humbled to be named the next CEO of Tyson Foods and am grateful to the board and the family for providing me with the opportunity to lead this incredible company," Hayes said in a news release. "Tyson Foods is well positioned to realize numerous growth opportunities – our company has a solid strategy that leverages compelling market dynamics and an experienced and highly capable management team and many thousands of hard working and dedicated associates."

The announcement came the same day Tyson Foods reported fourth-quarter results that included a lower-than-expected profit that missed analyst expectations. Shares of the company (NYSE: TSN) were down more than 15 percent in early trading.

Smith was asked by an analyst during the company's earnings conference call about the timing of his stepping down as CEO. The analyst cited the disappointing earnings report, the steep drop in stock price and a lawsuit the company is facing that alleges Tyson Foods and other poultry producers conspired to fix prices.

"I think this is an excellent time for us to be making this transition," Smith said. "The company is off to a phenomenal start to the quarter; we are on a very solid foundation. We dispute the claims, we're looking forward to defending ourselves in court on the litigation. That has nothing to do with the transition. There's not a better time. We have a great team. Tom's a very capable leader. There couldn't be a better time to be making this transition."

Hayes agreed with the timing of the move. In his closing remarks during the conference call, Hayes said he would continue to rely on Smith as a consultant.

"He has been a great partner bringing me up to speed on everything I need to know about the Tyson Foods family," Hayes said. "He's not going anywhere for three years. He's going to be on speed dial for me. I'm very happy about that."

Tyson Foods said Hayes is a 29-year veteran of the consumer products industry. Before working as company president, Hayes was chief commercial officer, overseeing all North American sales, in addition to the food service prepared foods business. He also previously served as president of food service.

Hayes came to Tyson Foods after the company purchased Hillshire Brands Co. of Chicago for $8.5 billion in 2014. There, Hayes was chief supply chain officer, responsible for operations including procurement, manufacturing, food safety and quality, engineering, and logistics. Before that, he was senior vice president and chief supply chain officer for Sara Lee North America.

"[Hayes] has the skills to deliver on our strategic goals and complete the transition towards our hybrid model," said Smith, who has been with Tyson for 36 years. "As you can imagine, it is a time of mixed emotions for me. I've spent my entire professional life here. In return I have been given opportunities I would never have imagined. I'm excited about its future and am confident that Tom is the right leader for the next chapter."

But what he has been doing goes back a while: He’s helping Shandong Sun Paper Industry JSC Ltd. of China with its plans to operate in Arkansas.

Dillon, whose sudden departure during a not-so-bad stretch at Deltic surprised many, is serving as a volunteer adviser in Shandong Sun’s long path to putting a billion-dollar pulp mill near Arkadelphia.

“I’m working on a volunteer basis to help the state of Arkansas and Sun Paper in locating the plant here,” Dillon told Whispers by phone last week. “This goes back a couple of years and has always been a part of the effort to attract the plant. It’s the right thing for the state, it’s the right thing for Sun, and it will have an enormous economic impact.”

The Sino-Arkansas courtship has lasted for more than five years and resulted in a memorandum of understanding between the company and the state, announced with great fanfare in April.

The pulp mill, on a 1,054-acre site 5 miles south of Arkadelphia, will be Shandong Sun’s first project in North America, with construction set to begin next year. Dillon has focused on easing Shandong Sun’s culture shock in adjusting to the American way of business.

By the time the plant is completely up and running in 2020, the state expects it to be staffed with 250 workers.

“They are in the process of pre-engineering now,” said Dillon, whose experience in what he calls the “wood basket” is valuable to an enterprise relying on a huge supply of timber, as paper mills do. Dillon led Deltic for 13 years and “left the company operating well and in good shape,” according to the man who replaced him, interim CEO Mark Leland.

“I am not formally engaged by anybody, but I’m offering advice to Sun on how we do things in America,” Dillon said. “They are learning our culture and how we do things here.”

Dillon has had his own cultural immersion in the meantime, visiting China as an emissary for the deal. “I was there about two weeks ago.”

]]>Mon, 21 Nov 2016 00:00:00 -0600http://www.arkansasbusiness.com/article/114229/sun-also-rises-for-former-deltic-ceo-ray-dillon
http://www.arkansasbusiness.com/article/114229/sun-also-rises-for-former-deltic-ceo-ray-dillonThere was a time when Arkansas was dotted with catfish ponds, and not the kind where children with cane poles and a can of worms would try their luck.

These catfish ponds covered acres and acres, mostly in south and southeast Arkansas, and were brimming with all sizes of catfish for the commercial processor. These commercial ponds — along with those in Alabama, Louisiana and Mississippi — helped feed the nation.

It wasn’t that long ago. To catfish farmers, whose market has cycled even as fish-farming techniques have improved, it might seem so.

“We’ve had a tremendous shakeout since the early 2000s where we lost acreage,” said Larry Dorman, an aquaculture specialist with the Cooperative Extension Service at the University of Arkansas at Pine Bluff.

Arkansas had nearly 38,000 acres devoted to catfish farming as recently as 2003, according to the U.S. Department of Agriculture’s National Agricultural Statistics Service.

In July, the statistics service reported that Arkansas farmers had scaled back operations to 4,900 acres.

The industry hit hard times when competition from Asian producers, which flooded the market with cheaper alternatives, combined with rising feed prices to put the squeeze on the Arkansas farmer.

The farmers who survived the downturn have seen a return to a more manageable market.

Feed prices, which once reached nearly $500 a ton, have fallen back to the $300 range, which gives flexibility to the farmers’ margin.

The price for a pound of catfish is in the $1.20 range, a much-welcomed improvement from the dark times when a market glut drove the price to 80 cents and even cheaper at some processing plants.

“The fundamentals are better for us,” said Bari Cain, the executive director of Catfish Farmers of America. Cain operates about 400 acres south of McCrory in Woodruff County. “Feed prices have gone down, and the prices have remained relatively good. The fundamentals look better.”

Intensified ProductionArkansas farmers may not have as many acres of catfish pond, but they have learned some tricks through genetics and technology to increase their production.

One of the biggest keys is raising a hybrid of a blue and a channel cat. Channel cats grow fast and adapt to different conditions but can suffer from diseases, and the hybrid is a fish that grows well without the same susceptibilities.

“With improved methods of fish farming, we’ve really increased production to a whole other level,” said Brad Graham, the president of Catfish Farmers of Arkansas. Graham operates a 475-acre farm in Montrose (Ashley County).

“Some ponds I’m pulling 15,000 pounds an acre; some ponds are pushing 20,000 pounds an acre. Five years ago, the best I could do was not even 10,000 pounds to an acre. Rather than increasing acreage, I’m trying to just increase production within the acreage I have. The hybrid catfish is one of the main differences.

“We can stock at a heavier density per acre and not have the disease we would have with the channels.”

Cain said hybrid catfish have been used for a decade and, coupled with technological and equipment advances, have allowed farmers to pump up their production — what Cain and Dorman call “intensification.”

Graham said he uses an elaborate — and expensive — 24/7 monitor system with buoys and “electrics” that ensure the ponds constantly maintain proper oxygen levels. That guarantees the fish are properly cared for and maximizes yield from each pond.

“All of my ponds are fully automated,” Graham said. “We don’t have a pond get away from us like it used to. Oxygen would get low and you’d catch it, but it would have been low for an hour or so. We don’t have that now. There’s no stress compared to a few years ago.”

Room for GrowthArkansas acreage may never return to the 35,000 to 40,000 range, but the state can still produce a significant amount of catfish for market. In the early 2000s, the top four states in the country — the agricultural statistics service stopped including Louisiana in its reports after 2008 — produced nearly 400 million catfish.

From July 2015 to July 2016, that number had fallen to 88.5 million, down 13 percent from the same time span the previous year. Arkansas’ production was 6.4 million, down from 6.9 million the previous year.

“We’ve had some changes in intensification of the industry since,” Dorman said. “We’re still producing a sizable amount of catfish; it’s just on a lot less acreage. Nationwide we are approaching a [healthy] state. We’re seeing a little bit of growth here and there, not massive growth.

“I’d love to see us back in the 20,000 range. I hope it happens.”

The problem with getting back to 20,000 acres, Dorman said, is finances. When farmers get hit, their bankers do too, and he fears that tighter lending might prevent farmers from being able to expand as the market does.

Also, some catfish farmers converted ponds to other agricultural uses, and getting them catfish-ready again isn’t simple or inexpensive. Creating new ponds is equally labor- and capital-intensive.

“We see some numbers that reflect processing being down,” Graham said. “I think that is a supply issue more than a marketing issue. You come off a time when people are losing money. People have to put money back into the ponds.”

Dorman said he believes it might take a few years for the fingerling supply — the baby fish that grow up to be delicious fillets — to catch up with the resurgent production needs.

The market seems stable enough to consider it, even with Asian imports still a concern. In 2015, Arkansas passed Act 1191, which required labeling if the product was imported and whether it was catfish or catfish-like.

“Their volume has increased, even this year,” Cain said of Asian competition. “We’re just making it despite all that. There is a certain amount of business that doesn’t want the Asian product. That’s what we’re catering to.”

Dorman said catfish farming isn’t an easy occupation because of the constant monitoring of supply and demand and the matrix of costs and price.

“The day you raise one catfish too many is the day the prices drop,” Dorman said.

Cain, who has been a catfish farmer since the mid-1980s, said he has to budget for the highs and lows of the market, from year to year. A good price in Year 1 allows him to survive a tough Year 2.

“It’s the average price you get over several years that keeps you going,” Cain said.

]]>Mon, 14 Nov 2016 00:00:00 -0600http://www.arkansasbusiness.com/article/114137/after-high-feed-prices-and-glutted-market-catfish-farmers-hope-luck-is-changing
http://www.arkansasbusiness.com/article/114137/after-high-feed-prices-and-glutted-market-catfish-farmers-hope-luck-is-changingThe Arkansas Forestry Commission surveys the state’s forests annually as part of the Forest Inventory & Analysis Program of the U.S. Forest Service. The information for the survey comes from satellite imagery and certified foresters collecting measurements from over 5,000 research plots.

Among the findings in 2015:

• Arkansas’ forests cover 19 million acres or 56 percent of the state. During the 1950s and 1960s, Arkansas lost almost 20 percent of its forestland. Since 1978, forestland has increased by more than 1 million acres.

• The southwest, Ozark and Ouachita regions of the state contain 88 percent of Arkansas’ forestland. The most heavily forested county is Dallas.

• Arkansas is home to the largest National Forest area in the South. It has 2.5 million acres in the Ozark-St. Francis National Forests and the Ouachita National Forest.

]]>Mon, 14 Nov 2016 00:00:00 -0600http://www.arkansasbusiness.com/article/114136/nearly-12-billion-trees-counted-in-arkansas
http://www.arkansasbusiness.com/article/114136/nearly-12-billion-trees-counted-in-arkansasTurner Grain Merchandising Inc. of Brinkley transferred nearly $100 million to its related companies a year before it filed for bankruptcy protection, according to lawsuits recently filed by its Chapter 7 trustee.

Rice didn’t return a call for comment. Those companies closed about the same time as the Brinkley crop broker in August 2014. Turner Grain and its related companies were operated by Jason Coleman and Dale Bartlett. Bartlett also has filed for bankruptcy protection.

Since October, Rice has filed more than 40 suits alleging that farmers and other entities, including the U.S. government, received improper payments from Turner Grain within 90 days of its bankruptcy filing in October 2014.

The trustee sued to recover the $170,000 that farmer Keith Wilkison of Brinkley received from Turner Grain on Aug. 7, 2014, just before the 90-day window opened. The trustee alleged that the money was for crops Wilkison delivered during the 2013-14 crop year. Turner Grain still owes Wilkson $300,000 for crops delivered in 2013, he told Arkansas Business.

Wilkison, who has been farming for about 25 years, said that he hopes he won’t have to close his 3,300-acre farm if he’s forced to repay the $170,000.

“We’re already in tough times,” he said. “The banks are working with me … to try and get over this deal.”

A trustee can pursue money paid to certain creditors within 90 days of a company filing for bankruptcy protection, said Timothy Tarvin, who teaches bankruptcy law at the University of Arkansas School of Law in Fayetteville. The time frame is expanded to a year if payments are made to company insiders, such as family members and business associates.

The law is meant to keep some creditors from being favored over others and receiving “more than they would have otherwise received in the Chapter 7,” Tarvin said. A defendant, however, could raise a number of defenses, or could reach a settlement.

‘Money They Didn’t Have’

In the bankruptcy, Turner listed $13.7 million in assets, and its claims register shows $39.7 million, millions of which is owed to farmers who sold crops to Turner Grain.

Coleman and Bartlett “were paying for grain, and they were losing money somewhere in that process,” said attorney Gregory Bevel of Rochelle McCullough LLP of Dallas, who is working for the trustee. “And because they had multiple businesses and multiple bank accounts, somehow they were floating money that they didn’t have.”

Bevel said he didn’t know what happened to the money the Turner Grain-related entities received because his role in the bankruptcy is limited to two lawsuits.

A group of Lonoke County farmers who lost $5.5 million dealing with Turner Grain alleged that Coleman and Bartlett were operating a Ponzi scheme. Bevel doesn’t agree.

“As far as Turner Grain itself, I don’t think it would be accurate to describe it as a Ponzi scheme,” he said. “They weren’t taking people’s money. They were accepting shipments of corn and shipping them off, and the payments didn’t come in.”

Coleman filed an answer to the farmers’ lawsuit on Nov. 3. Although Coleman denied the allegations of wrongdoing and didn’t provide any details, it was the first time Coleman has publicly answered allegations surrounding the collapse of Turner Grain.

In early 2015, one of Turner Grain’s creditors, Southern Rice & Cotton LLC, wanted to question him about his involvement in the company. Coleman’s attorney, Lisa Ballard of North Little Rock, said in a bankruptcy filing that Coleman asserted his Fifth Amendment right against self-incrimination, and U.S. Bankruptcy Judge Phyllis Jones ruled in April 2015 that Coleman wouldn’t be compelled to talk.

One of Coleman’s attorneys, Jeff Rosenzweig of Little Rock, said in a bankruptcy hearing last year that Coleman would assert the Fifth Amendment because there was a federal criminal investigation going on.

As of last week, no charges had been filed against Coleman.

Ballard, who filed the answer for Coleman, didn’t return a call to Arkansas Business. Rosenzweig was unavailable for comment, and Coleman couldn’t be reached for comment.

Sloppy Record-Keeping

The lawsuits filed by Turner Grain’s trustee show that Turner Grain and the related companies were so intertwined that they shared money and other assets out of the Brinkley office. The related companies “regularly took part in the fulfillment of the same contract transactions with grain sellers and buyers as” Turner Grain, the lawsuit said.

And Turner Grain also would pay the debts of the related companies as if they were Turner’s own debts.

Gerald Loyd, 68, of Dumas was president and the only employee of Turner Commodities, which received $29.7 million from Turner Grain in the year before Turner Grain filed for bankruptcy, according to the trustee’s lawsuit.

Loyd, in an affidavit taken for the Lonoke farmers’ lawsuit and filed in June, spelled out the sloppy bookkeeping he saw.

A helicopter pilot during the Vietnam War, Loyd first became acquainted with Coleman and Bartlett in 2002 or 2003, when Loyd was working as a rice buyer for another company.

But it wasn’t until 2004 that Bartlett and Coleman approached Loyd with the idea that they should form a company that would buy and sell agricultural crops in southeast Arkansas.

“The initial proposal was that Bartlett and Coleman would help get the business started and teach me the business,” Loyd said in the filing. “The initial proposal was that Bartlett and Coleman were also to handle the record keeping, bookkeeping and banking for” Turner Commodities.

Loyd was brought into the deal because the farmers knew and trusted him.

“About a year after the business got started I figured out that Coleman and Bartlett were not real good record keepers,” Loyd said.

The bank account wasn’t being closely monitored, which led to overdrafts.

Turner Commodities operated as a back-to-back dealer, meaning Loyd would contact the potential grain buyers and ask them what crops they needed and what price they were offering to pay. Then he would call farmers and offer to buy those crops for a slightly lower price. The difference might be 5 cents per bushel.

Loyd said that Turner Commodities didn’t have to worry about being short of cash, unless a buyer or seller failed to honor its contract.

Just before the financial trouble was exposed in August 2014, Bartlett had called and, according to Loyd, said, “Jason [Coleman] has done some things that are not right and it looks like he is in bad trouble.”

By then the word had spread that Turner Grain was in financial trouble.

Loyd reviewed Turner Commodities’ bank statements and found that for more than a year Coleman had been using the account in “an unauthorized manner.” He allegedly would pull money out of the account and put it back in, using it almost as if it were a line of credit, Loyd said.

Loyd said that Turner Commodities was overdrawn about $200,000. He also said the company closed its doors after the financial problems were exposed.

Loyd said that Turner Commodities “is just a victim of that mess just like the farmers.”